//
you're reading...
Uncategorized

A Business Bankruptcy

The General Motors (GM) bankruptcy has been well chronicled. Through the intervention of the US government and the presence of a plan before going in, GM went through bankruptcy in record time. Most Fortune 500 companies that enter bankruptcy stay there for two years, but definitely over a year. Not so here. You should have seen me rejoicing. I literally jumped up and down. I had been stating for nearly 20 years to anyone who would listen that GM needed to seriously restructure, and that the GM management was not capable of doing it themselves. They were too vested in the status quo. This came from my days as a college intern at GM for four summers at two different plant locations and the observations I made at that time. But that’s a discussion for another time.

According to a superb Wall Street Journal article, “The Secrets of the GM Diet”, business bankruptcy has greatly benefited GM. Here’s a table copied directly from the article, comparing GM’s performance 3 years ago with the performance this past quarter. The highlighting is my emphasis.

2Q  2008        2Q 2011

Global Production (in millions of units)
2.2                   2.4
Global employment (in thousands)
263                  208
Cost of sales (in billions)
$42.3               $33.8
Revenue (in billions)
$38.2               $39.4
Profit/loss (in billions)
-$15.5              $2.5

Look at how positive the 2nd quarter 2011 numbers are compared to 2008. Why am I sharing this? Because some small and medium companies are seriously underwater with the debt they have on their balance sheets and the thought of a bankruptcy makes the owner(s) ill. I do believe that there are other options to bankruptcy that may be better but the only way to determine them is to face the financial and operational challenges head on, stare the bankruptcy in the face and say, “Ok, what should I do?” The worst thing you can do is bury your head in the sand…unless you are exiting the business and passing the headache on to someone else to handle. Like GM’s performance, when your company’s financial performance and balance sheet are in such a mess, bankruptcy or one of its alternatives can be the answer to your prayers to return your company to a profitable, growing enterprise.

Advertisements

About Tiffany C. Wright

Hi! I,Tiffany C. Wright, am the author of the ebook, "Help! I Need Money for My Business Now!!" and the book "Solving the Capital Equation: Financing Solutions for Small Businesses", available on Amazon. I am the president of Toca Family Business Services, a short-term & project-based interim management & strategic and financial advisory firm, located in Atlanta, Georgia. In the past five years I've helped small and medium companies restructure and obtain over $31 Million in financing and a similar amount in purchase orders and contracts. I have an MBA in Finance and Entrepreneurial Management from the Wharton School of Business at the University of Pennsylvania and a B.S. in Industrial and Systems Engineering from The Ohio State University. Personal: I enjoy investing. I am a prodigious reader of everything from business books, magazines, and newspapers to horror and popular fiction. I read 4-6 books per month. I also love to travel. I've been to 33 countries on 5 continents and lived in Japan for 2.5 years and aim for a foreign locale twice a year. I am also an athlete and run track on the Master's Circuit. The highlight was placing 7th in my age group in the 2007 World Master's Track and Field Championships in Italy.

Discussion

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

The Resourceful CEO, Tiffany C. Wright

the president of Toca Family Business Services, a strategic and financial advisory firm which provides short-term & project-based C-level management. She is the author of Solving the Financial Equation: Financing Solutions for Small Businesses, available on Amazon.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1 other follower

%d bloggers like this: